Tesla's board eyes new pay deal to end Musk bonus saga
Tesla is considering a new pay agreement for its creator and CEO, Elon Musk. According to the "Financial Times," the company's board wants to resolve the uncertainty surrounding the long-standing legal battle over Musk's substantial bonus. Several proposals are currently on the table.
Tesla's board has established a special committee to develop a proposal for a new compensation package for Elon Musk. The "Financial Times" notes that this effort aims to resolve the ongoing dispute over the 2018 invalidated package, which was worth up to $56 billion. This package involved stock options that were a condition for Musk's additional compensation.
Musk and the Tesla dispute: Court previously blocked agreement
Tesla and Musk have been engaged in a legal battle over this matter for seven years. In January 2024, a Delaware court ruled that the amount Musk demanded was "highly overvalued" and described Tesla's board members acting under his control as being "like supine servants of an overweening master." As a result of the verdict, the billionaire did not receive the payout. However, he did not give up—an appeal was filed with the Delaware Supreme Court.
The committee reviewing Musk's package includes two people: Tesla's Chairwoman, Robyn Denholm, and Tesla board member, Kathleen Wilson-Thompson. The "FT" reports, citing sources close to the matter, that the committee is considering both a new stock option package and alternative forms of compensation for Musk's work to date, should the Delaware court not reinstate the invalidated agreement.
The value of the options Elon Musk was supposed to receive peaked at up to $146 billion. The billionaire has made it clear that he desires more control over Tesla. At the beginning of 2024, he announced that without owning at least 25% of the shares, he would not be able to defend the company against activists and ensure "responsible AI development." Tesla did not respond to the "FT" inquiries on this matter.
According to "Financial Times" sources, several scenarios are under consideration, though none have been finalized yet. Challenges include the high accounting cost of potentially regranting the options (over $50 billion) and a possible 57% tax for Musk if the rewards are granted in cash.
